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CAW sees wages increases unlikely in Ford talks

The Canadian Auto Workers union will seek creative ways to sweeten compensation for its members because Ford Motor Co (F-N) is unlikely to agree to annual wage increases in contract talks, the union's president said on Wednesday.

The CAW, which began formal talks with Ford Canada on Wednesday after starting negotiations the previous day with General Motors Corp (GM-N) and Fiat’s Chrysler, is seeking to claw back concessions it made in 2009 to help keep automakers afloat during the recession.

"We're not going to put any more pain on our existing members, quite frankly, because we're not going to be able to get the annual improvement factors that we've got in the past, so we're going to share in the success of the company," CAW President Ken Lewenza told reporters on a break from morning meetings with Ford.

He said it was unlikely the union would win the 3-percent annual wage increases awarded in previous contracts.

"I can guarantee you there will be no wage reductions. Now are we going to be creative in terms of how we compensate our members moving forward? We obviously have to."

Reinstating an $1,700 annual Christmas bonus, sacrificed in the last round of talks, is one such "no brainer" example, he said.

Lewenza said the union would not agree to any wage reductions, permanent two-tier salary systems or "tinkering" with pensions.

The CAW accepted a pay freeze in its last labour contract with the Big Three, which expires September 17. The contract dates from 2008 but was amended in 2009 during a North American auto sector meltdown that pushed GM and Chrysler into bankruptcy.

The CAW broke away from the United Auto Workers in 1985, partly because the UAW accepted profit-sharing, while the CAW refused to do so.

Last year's UAW deal had no wage increases for veteran workers and preserved a two-tier system, where newly hired workers start at about half the full hourly wage. The agreement also included a profit-sharing formula and signing bonuses.

EVERYTHING ON TABLE

Ford and the other automakers, which are now profitable, say that Canada has the highest costs in the world and labor expenses must come down.

"Everything is on the table," to improve labour costs, Ford Canada's lead negotiator Stacey Allerton said during a break in talks. "In order to sustain and grow our operations in Canada, we have to be competitive."

The base wage of an assembler in Canada comes in at $34 US versus $28 in the United States, Allerton said, while "all-in" labour costs are $79 in Canada versus $64 in the U.S.

The CAW argues that there is only a 5 percent difference between all-in Canadian and U.S. labour costs, but accepts the base wage figures.

The union argues that such labour cost comparisons are unfair because they are distorted by the strong Canadian dollar.

"Let's increase productivity, let's get rid of the waste in the workplace," Lewenza said, adding there are ways to cut costs without hurting workers' paychecks.

Ford Canada has about 4,500 CAW workers in Ontario, including a vehicle assembly plant in Oakville that builds the Ford Edge, Ford Flex, and Lincoln MKX and MKT, along with two engine plants in the Windsor area.